President Obama: offshoring fears are outdated, unwarranted

John Ribeiro |
Nov. 8, 2010

The president also made a pitch for larger exports from the country to India <script src="http://connect.facebook.net/en_US/all.js#xfbml=1"></script><fb:like href="http://www.facebook.com/pages/MIS-Asia/122777831113430" layout="button_count"></fb:like>

Indian outsourcers, who send a large number of staff to customer sites in the U.S., were saddled as a result with an increase in visa costs. But they were more alarmed by the threat of increased protectionism from the U.S.

President Obama's own remarks earlier this year fueled this fear. While proposing to reform the U.S. tax system for companies earning profits abroad, he alarmed Indian outsourcers in May last year when he made a reference to jobs getting created by U.S. companies in Bangalore, the hub of India's outsourcing industry. The tax code is broken as it's a tax code "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York", the president said.

President Obama this week however made it clear that trade between India and the U.S. should not be a one-way street. Less than 10 percent of India's imports of goods are from the U.S., and only 2 percent of U.S. exports of goods are to India. There is still untapped potential for trade between the two countries, he said.

Some of the trade would be in technologies that were adapted by U.S. companies for Indian markets, such as mobile telephony towers that run on solar power, he said.

The president also said the U.S. would reform controls on the export of high technology to India. Some of these controls on dual-use technologies, that can be used for both civilian and military purposes, were imposed by the U.S. on certain government labs and organizations after India exploded a nuclear device.